Investor Update

Basel, 12 December 2005

Roche update on Tamiflu global supply to meet future world demands – from partnerships to regional sub-licenses

12 additional partners identified to enhance Roche production network
First sub-license for China granted to Shanghai Pharmaceutical Group

Roche announces that it has in less than two months completed the systematic evaluation of around 200 third parties interested in helping with the manufacture of Tamiflu. 12 potential partners have been identified whose addition to Roche’s Global Tamiflu Supply Network would enhance available supply. As a next step, these potential partners will be invited for further in depth negotiations.

Roche also announces that it has granted a sub-license for China to Shanghai Pharmaceutical Group.

William M. Burns, CEO Roche Pharma Division, commented: “Following our open invitation to third parties we have established a short list of partners who can be ready to expand the capacity beyond 300 million treatments annually by 2007. As yet we have not identified anyone who could significantly speed up the agreed delivery timelines for the first half of 2006, but we have been able to identify partners to insure against breakdowns in supply and partners to broaden geographic coverage. Based on the current orders we have received from governments around the world our capacity to produce 300 million treatments by 2007 is significantly ahead of demand.”

Sub-licenses for China and other countries
Roche and Shanghai Pharmaceutical Group have signed the first sub-licensing agreement for the overall production of oseltamivir for pandemic use in China. Roche is also in negotiations for local partnerships in other countries.

Expansion of the Global Tamiflu Supply Network
After systematic screening, Roche production experts started detailed negotiations with twelve companies who met the defined criteria in terms of quality, technical ability, capacity and the speed of bringing that capacity on stream. These companies include major pharmaceutical companies, large generic manufacturers and specialty chemical producers. Roche is now actively engaged in discussions about technology transfers and commercial terms with this shortlist of companies.

“The skills of the different companies offering their services have been thoroughly evaluated by our technical team in recent weeks. As we have surveyed the applications we have focused our attention on how our specialist production team together with each contributing company can further advance global supply,” commented Jan van Koeveringe, Head of Pharma Global Technical Operations.

Roche now shifts its emphasis and resources to technical transfer and implementation. Therefore the formal process for new contacts has been closed.

Roche’s expanded capacity – delivery dates brought forward
Roche recently announced that it will have increased its own production capacity with existing partners and be in a position to produce 300 million treatments of Tamiflu annually going into 2007. To date all government orders for pandemic supplies have met their agreed delivery dates and with the further stepwise scale-up of its production network activated mid- 2006 Roche will be in a position to bring forward delivery timelines.

Roche’s efforts to support government pandemic stockpiling
Roche has been working with many governments over the last few years to determine their needs for stockpiling of Tamiflu and has received and/or fulfilled orders from around 50 countries. In specific countries, particularly in South East Asia, in light of their close proximity to the outbreaks of “bird flu” the company has been in a position to advance delivery schedules. This includes:

• Taiwan, where Roche will be in a position to deliver requested quantities during 2006
• Vietnam, where Roche will be providing capsules or active pharmaceutical ingredient for  third parties to encapsulate locally
• Korea and Malaysia where Roche are providing capsules
• In India where Roche will be delivering 100,000 treatment courses of Tamiflu ordered by the Indian Government and where negotiations about a local sub-license are ongoing with local manufacturers.

In Thailand, Philippines and Indonesia, Tamiflu is not patent protected. These governments are therefore free to purchase or manufacture oseltamivir at their discretion. Roche remains willing to discuss supplying governments’ orders and the quality requirements of supply.

Patent and Pricing
Tamiflu exists through innovation as a result of the patent system and it is important that medical innovation continues to be encouraged through the granting of patents. Through its collaboration and sub license policy with Tamiflu Roche contributes to the defense against a potential influenza pandemic while also defending intellectual property rights - the key incentive for future innovation.

In addition, Roche offers a tiered pricing system for the sale of Tamiflu with significant reductions for pandemic use. These lower prices are further reduced for less developed countries.

Roche and WHO
Roche has also pledged to donate 3 million treatments to the WHO as a rapid response stockpile for use at the epicentre of a pandemic. This amount, according to experts, could contain or slow down the spread of a potential pandemic at the source of the outbreak, if delivered rapidly. Roche continues the collaboration with WHO as they prepare for the “Donor Conference” in January 2006.

In Summary
“The supply chain now being put in place exceeds our current orders from World Governments. During 2006 our supply chain will grow dramatically reaching an annualized 300 million plus treatments by the start of 2007. We are now also in the position to have a back-up supply in case of an emergency and specific geographic coverage has also been enhanced with suppliers in Europe, the Americas and Asia. Companies we identified to take the capacity further will therefore allow Roche’s supply network to respond to future demands from world governments,” concluded David Reddy, Roche Pandemic Task Force Leader.

Roche and Gilead
Tamiflu was discovered by Gilead and developed jointly by Gilead and Roche. Roche has exclusive world-wide rights for the manufacturing and marketing of Tamiflu and continues to work in partnership with Gilead.

About Roche
Headquartered in Basel, Switzerland, Roche is one of the world’s leading research-focused healthcare groups in the fields of pharmaceuticals and diagnostics. As a supplier of innovative products and services for the early detection, prevention, diagnosis and treatment of disease, the Group contributes on a broad range of fronts to improving people’s health and quality of life. Roche is a world leader in diagnostics, the leading supplier of medicines for cancer and transplantation and a market leader in virology. Roche employs roughly 65,000 people in 150 countries and has R&D agreements and strategic alliances with numerous partners, including majority ownership interests in Genentech and Chugai.

All trademarks used or mentioned in this release are legally protected.